Traditional bank models that depend on a network of branches have gradually converted to a more integrated model of e-banking services.
Technological developments have had a wide-ranging impact on all sectors of society and the banking sector is not an exception.
According to statistics from the State Bank of Vietnam (SBV), about 59% of credit institutions have deployed a digital transformation strategy in the initial stage, while 35% are in the process of working out viable strategies. Only 6% say they have not yet envisaged their own digital transformation strategy.
The statistics has showed Vietnamese banks’ great readiness for the widespread implementation of digital transformation and digitalization of banking services.
The expeditious development of technologies provides customers with the ability to search for and access information, while removing geographical barriers allowing them to select the most suitable services. They are considered the prime motivator behind the rollout of new products and services by banks.
To meet the increasing demands of customers, the banking sector has carried out the digitalization process throughout its full range of products and services such as payment, money transfer, borrowings, savings and financial management.
The application of digital banking models such as TPBank with automatic bank services like LiveBank, VPBBank’s Timo, Vietcombank’s DigitalLab, Vietinbank’s Corebank, Military Bank’s ChatBot and VIB’s MyVIB are the most popular examples of this trend.
Apart from banks, the emergence of financial technology companies (Fintech), which offer financial solutions based on digital platform, has contributed to speeding up the finance and banking sector’s digitalization strategy.
Banks are stepping up the digital overhaul and the adoption of modern technological breakthroughs such as Cloud computing, Big Data, AI and blockchain in their services and products.
At a recent seminar on Industry 4.0, Nguyen Hung, general director of TPBank emphasized that the trend of digitalization in banking activities is inevitable. With predominant advantages, digital platform have helped banks to rapidly increase their shares. Especially, in the digital era, the banks that can flexibly adapt to customers’ demands and seize opportunities from new technologies will be at a distinct advantage.
From the perspective of Mr Nghiem Thanh Son, Deputy Director of Payment Department and Deputy Head of the SBV’s Fintech Steering Committee, Vietnamese banks are cognizant of the strength of digital transformation, that is to create a digital core for the banking system.
Accordingly, the digital core is viewed as the basis for the development of digital banks, helping expand interaction with customers’ digital ecosystem, and and Fintech companies through Application Programming Interface (APIs).
Mr Son said SBV has worked toward development orientations and application of information technology in banks to promote the digital transformation of the banking sector.
SBV will continue to refine the legal framework for new products and services that apply new technologies and new business models (digital banking, e-wallets, eKYC or OpenPI) in order to meet the requirements of management in the face of Industry 4.0.
At the same time, anther target is also to build a legal environment to give a boost to the innovations of Fintech companies in order to encourage safer and more effective products and solutions of Fintech.
One of the most important problems faced by the digitalization of banking services is that of ensuring safety and security for banking operations and customers’ payment transactions.
The central bank will apply the most advanced security international standards in accordance with the latest development trends in the banking sector. SBV will also set forth the requirements for modernizing the IT system, roll out upgrades to the new-generation core banking system, invest in foundation technologies of the Fourth Industrial Revolution, catch up with the trend of digital banks’ development and step up cooperation between banks and Fintech.
In addition, priority will be given to the development of safe, effective and convenient payment solutions and the application of the latest technologies such as NFC, QR Code payment and Tokenization.